PTTGC stock rises as Q4 profits outperform expectations

PTT Global Chemical (PTTGC), Thailand’s largest petrochemical producer, climbed 3.12 per cent to 66.00 baht per share Tuesday’s morning, with a transaction value of 1.53 billion baht, based on better-than-expected quarterly results.

The petrochemical maker posted fourth-quarter net profit in 2020 of 6.4 billion baht, driven by olefins, aromatics and profit sharing from subsidiaries. The results beat market consensus by 8 percent.

For full-year operations, PTT Global Chemical saw a net profit of 200 million baht, down 98 per cent year-on-year, dragged down by the loss in the first quarter of 8.9 billion baht on lower product prices during the pandemic and the oil price war.

The quarter’s profits were also up 605 per cent from the previous one, when pandemic restrictions were tight, and up 1,613 per cent from the fourth quarter of 2019, which saw severely depressed profits from a strong baht, threats of a US-China trade war, and a scheduled refinery closure.

PTT Global Chemical announced a dividend payment of 1.00 baht per share of last year’s operation to be paid on April 23, with an ex-dividend date on February 25.

SCB Securities maintained ‘Outperform’ rating on PTTGC with a target price of 75 baht, saying that the solid product spread for the olefins chain, improving margin for aromatics and oil refinery, and new olefins capacity would boost the company’s earnings recovery in 2021.

“The olefins business will continue to shore up earnings this year thanks to feedstock flexibility and plans to maintain maximum utilization rate to benefit from the favourable market.” said the SCB analyst.

However, the key risk is oil price volatility, weaker demand for products and the increasing trend to ban single-use plastics, he added.

Olefins and aromatics are the two main categories of chemical products produced by refining petroleum. Both are further processed into a range of plastics, resins, solvents, detergents and other materials.

Analysts at Land and House Securities expected that PTTGC’s earnings in the first quarter would continue to perform well partly due to the low base last year coupled with rising crude oil prices.

Other listed firms in the petrochemical sector also rose, with Indorama Ventures (IVL) up 1.27 per cent to 40.00 baht, Vinythai (VNT) 3.03 per cent to 34.00 baht, and Global Green Chemicals (GGC) 0.94 per cent to 10.70 baht by the mid-day break.

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